Earning management,Discretionary Accrual,Factor model Earnings management is the typical agency management of corporate finance in bull and bear stock markets. The chief executive officer (CEO) demonstrates his or her own talent and skill for his or her excursive stock options to increase personal wealth. In a bear market, the CEO adds corporate performance to protect the personal tenure position. In numerous situations, earnings management prevails in bull and bear stock markets. We consider that the purpose of earnings management is to raise corporate value for stock price. Therefore, we examine these scenarios using Taiwan stock market listed corporations. Our findings show that earnings management does not have a systematical effect in bull and bear markets for stock price. Our results indicate that (a) the most important factor is free cash flow when CEOs desire to conduct earnings management; (b) in both bull and bear markets, free cash flow remains the best factor; (c) the control variables are significant when the market value is divided by the book value and company size, which are MB and SIZE, but non-significant in fixed asset ratios and debt ratios, which are the FFASSET ratio and the LLASSET ratio; and (d) CEOs that include board of director shareholders have asymmetric effects in bull and bear markets.
Relation:
Asian Journal of Business and Management Sciences,10(2), 20-37
